Todd Harrison: S&P 500 at All-Time Highs With High-Beta Tech in a Bear Market?
Financial markets approach an inflection point.
Good morning and welcome to the midweek hump. There's a lot going on so we'll cut to the chase and dive right in with some random thoughts, in no particular order:
If Twitter (NYSE:TWTR) has a market capitalization +/- $20 billion and LinkedIn (NYSE:LNKD) has a market cap of $18 billion, is Facebook (NASDAQ:FB) really worth $150 billion? I know there is an execution premium in Facebook, and some will argue it's a tech holding company at some level, but an 8x multiple seems extreme -- and perhaps ripe for a pair trade.
Through a pure price lens, Twitter $40 -- former support -- will morph into resistance in 140 characters or less.
Yesterday we flagged BKX (INDEXSP:BKX) 67, RUT (INDEXRUSSELL:RUT) 1112 and IBB (NASDAQ:IBB) 221.5 as the Triple Lindy of 200-day moving averages. They held across the board on Turnaround Tuesday, but they should remain on our radar. The S&P 500 (INDEXSP:.INX), for purposes of perspective, is 6% above its 200-day while the Nasdaq-100 (INDEXNASDAQ:NDX) is 5% away.
The Ukraine-Russia conflict continues to escalate, yet gold, which one would think would serve as a safehaven, just put in a third "lower high" under the 50- and 200-day moving averages. I would imagine a lot of bugs are scratching their heads on this one; sometimes we can learn a lot just by watching.
The S&P is less than 1% from an all-time high. That's either the definition of resilience given the bear market in high-beta tech (the reaction to news is always more important than the news itself) or one of the better opportunities to make sales that we've seen in years. Where you stand is a function of where you sit; I will simply remind you to synch your time horizon and risk profile.
- The Smart Money Index remains in "PAY ATTENTION OR YOU MIGHT GET SMOKED" mode. An updated chart is below.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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